Financial Institutions, Inc.

name is Chach and I'll be coordinating your call today. After the presentation, there'll be a Q&A session and to register to ask a question, please press star followed by one on your telephone keypad. If you change your mind, please press star followed by two. I'd now like to hand over to your host, Kate Croft, Director of Investor Relations to begin. Please go ahead.

Thank you for joining us for today's call. Providing prepared comments will be President and CEO Marty Birmingham and CFO Jack Clamp. They will be joined by additional members of the company's leadership team during the question and answer session. Today's prepared comments and Q&A will include forward-looking statements. Actual results may differ materially from forward-looking statements due to a variety of risks, uncertainties, and other factors. We refer you to yesterday's earnings release and investor presentation, as well as historical FTC filings, which are available on our investor relations website, where it's a proper description and a detailed discussion of the risk factors relating to forward-looking statements. We'll also discuss certain non-GAAP financial measures intended to supplement and not substitute for comparable GAAP measures. For affiliations of these measures to GAAP financial measures, we'll provide an earnings release filed in this exhibit to Form 8K or in our latest investor presentation available on our IR website, www.fisi-investors.com. Please note this call includes information that may only be accurate as of today's date. January 31st, 2025. I'll now turn the call over to President and CEO Marty Birmingham.

Thank you, Kate. Good morning, everyone, and thank you for joining us today. Our fourth quarter was busy and highly productive, highlighted by our successful equity offering and subsequent restructuring of our available for sale investment securities portfolio. We sold $653.5 billion of low-yielding securities and reinvested the proceeds and higher-yielding agency-wrapped securities. The result is a balance sheet that we expect to contribute to a much stronger earnings profile moving forward, including expanded net interest income, net interest margin, return on average assets, and an improved efficiency ratio. We recorded a $100.2 million pre-tax loss associated with the securities repositioning. which resulted in net losses available to common shareholders for the fourth quarter of $66.1 million, or $4.02 per diluted share, and $26 million, or $1.66 per diluted share, for 2024. The after-tax impact of the securities loss was about $75 million, and this was fully offset by a portion of the capital we raised. Market reception was very positive to our common equity offering, which was more than four times oversubscribed, and we were pleased to see that the over allotment was executed quickly. As a result, we issued $115 million of new capital to many new shareholders and several existing ones through the offering, generating net proceeds of $108.5 million. We intend to thoughtfully deploy the remaining dry powder in a way that supports shareholder value and may elect to call a portion of our sub-debt that is set to reprice this year. We believe our stronger capital position and improved earnings outlook position us well to drive sustainable and profitable growth, even as we invest in people, process, and technology to support our vision of being a high-performing financial institution. Jack will provide more details on our financial results and 2025 expectations shortly, but I would like to first touch on a few highlights. Regulatory and tangible capital ratios expanded meaningfully. Our common equity tier one ratio increased 60 basis points from September 30th and 145 basis points from year end 2023, while our TCE ratio increased 147 and 240 basis points, respectively. Cumulated other comprehensive loss was $52.6 million at year end, down from $102 million at September 30, 2024, reflecting the balance sheet restructuring. Margin expansion continued, up two basis points from the third quarter to 2.91% in the fourth quarter. Full year NIM of 2.86% was on the low end of our guided range. Commercial loan growth was strong. up 3.8% during the quarter and 4.5% during the full year of 2024. Asset quality results remain relatively stable, including annual net charge-offs to average loans of 20 basis points, consistent with 2023. Turning to deposits, we remain committed to core in-market deposit gathering with relationship-based accounts under the wind-down of our BAS offerings. Bass deposits were approximately $100 million at year-end 2024, or less than 2% of total deposits. We have one live bass partner and three in the off-boarding phase, given the progress made in developing migration plans and the partner's success in identifying new banking providers. We expect the majority of these deposits to outflow in the first half of the year. The deposit's total is $5.1 billion, at the end of 2024, declining $202 million from September 30th, due primarily to typical seasonal reductions in public depositor accounts, which should replenish with normal first quarter tax collection and financing inflows. From the end of 2023, the $108 million decline in total deposits is attributed to reductions in broker deposits and lower reciprocal balances. Total loans were up 1.7% from September 30th and relatively flat with year-end 2023, and solid commercial loan growth during both the quarter and year was partly offset by a planned reduction in our consumer indirect portfolio. As we shared previously, we manage our indirect portfolio based on a blend of demand and spread maintenance and intentionally allow runoff to outpace originations while we maintain a strong focus on profitability and favorable With respect to commercial, growth for both the quarter and year was led by commercial mortgage. As you'll see in our earnings release, we've added additional portfolio granularity of construction, multifamily, non-owner-occupied, and owner-occupied commercial mortgage loans. New CR reproduction of $74.3 million in the fourth quarter was led by multifamily, office, hospitality, and land development. We saw notable draws on existing industrial and land development as well. From a geographic standpoint, fourth quarter CRE production was basically an even split between our outstate New York and the Atlantic markets. Commercial business laws were up about 11 million or 1.7% from September 30, 2024. While it's a highly competitive market, we see good opportunities to drive credit discipline commercial business loan growth in 2025. There is significant economic development activity taking place across our New York footprint. The Syracuse Rochester Buffalo corridor was recognized as a tech hub by the federal government for the region's coordinated focus on semiconductor manufacturing. And our branch network is well situated in that geography. We believe more of the opportunity stemming from these investments will come to fruition in 2026 and beyond. Given that the most significant project is expected to break ground in November, we could start to see some impact later this year. As the quality metrics were fairly stable, in the approximately 41 million of non-performing loans we reported at year-end continue to relate to the two separate commercial relationships that we've previously discussed. We continue to work closely with all parties involved, but do expect that resolution will take time. Commercial and residential net charge-offs were essentially nonexistent in 2024. Consumer indirect net charge-offs did increase from the third quarter but remained lower than the levels we reported at year-end 2023. We recorded a provision for credit losses of $6.5 million in the fourth quarter of 2024 compared to $3.1 million in the third quarter. A higher provision for loan losses in the fourth quarter as compared to the third quarter is attributed to a combination of factors, including higher loan growth as well as increases in net charge-offs and qualitative factors. The higher qualitative factors were primarily associated with elevated indirect delinquencies, comparing the third and fourth quarters, which is somewhat seasonal. As a result, the allowance for credit losses on loans to total loans increased six basis points to 1.07%, as compared to September 30th. It's not what we remain comfortable with, given the health of our portfolios and commitments to credit discipline lending. I would like to now turn the call over to Jack for additional commentary on our financial results and 2025 expectations.